Obama hears concerns on climate plan

It was the venue least likely to produce controversy of any kind: A hand-picked panel of economic bigwigs meeting in a publicly webcast session with President Barack Obama to exchange semi-scripted speeches about “green jobs” and the economy.

But for all that, the president heard some real criticism of his proposal for a cap and trade plan to limit carbon emissions Wednesday morning during the first quarterly meeting of his new Economic Recovery Advisory Board.

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Obama seemed eager to invite disagreement in a meeting where he otherwise heard some typical presidential fawning – board members talked repeatedly of Obama’s “leadership,” his “influence” and the ways in which he could “use the bully pulpit.”

“To the extent that there’s any skepticism in the room, I want to make sure that gets put on the table and we have a real conversation,” Obama said.

Caterpillar CEO James Owens took the opportunity to offer some delicately phrased words of criticism, arguing that a cap and trade system – if implemented by the United States but not by countries around the world – could harm the nation’s economy as companies left for countries where it is less expensive to do business.

“Our concern,” Owens said, “is we need to put this in an international context.” Moving “unilaterally” could mean dire consequences for the economy, he said. But Owens was also careful to say that negotiations on a global cap and trade program could be successful. “I think that there is a good chance that you will find the Chinese, for example … are likely to want to work with us.”

AFL-CIO Secretary-Treasurer Richard Trumka agreed. “We think that this has to be done on two tracks, the United States and internationally,” he said.

The president also heard concerns about the impact of a cap and trade program on consumers, who would be saddled with pass-along costs from companies. Conservative Harvard economist Martin Feldstein told Obama that the costs per capita could range from $400 to about $1,500 per person in additional annual expenses. “I think it’s important to think about that and recognize the magnitude of that cost increase,” Feldstein said.

Obama also heard from Robert Wolf, CEO of UBS Group Americas, who said he worries about the danger of creating a new financial market to trade carbon offsets. “We don’t want to redo the over the counter derivatives problem we just came out of,” Wolf said. “When you take a small asset class and make it investable, you have a lot of volatility. We should make sure we understand what we’re going to be trading and who are the participants.”

Saying the economy is “seeing some return to normalcy,” Obama told the group he’s pleased to see “some progress.” Turning to climate change, though, Obama said, “This is a huge, complicated, difficult issue.”

The 16-member panel, chaired by former Federal Reserve Board chairman Paul Volcker, was created in November as a brainstorming body. But it has been the subject of some controversy recently over what it is supposed to do and how much access Volcker has to President Obama.

Volcker told the Wall Street Journal that “the whole organizational side of this has been a nightmare.”

That may be one reason why the stage craft of the meeting seemed designed to send a message that it was an important panel, hard at work. Members sat packed closely together, with notes and documents sprawled across the table before them. And the President was careful to call on each panel member, working his way around the room in methodical fashion.

Sitting in a row of chairs behind the president were arrayed key economic players in his administration, as if to underscore the significance of the panel’s activities. They included White House senior advisor Valerie Jarrett, energy and environment advisor Carol Browner, Council of Economic Advisors chair Christina Roemer and National Economic Council director Larry Summers.